Medications that Don’t Work and Costs that Vary by 865%: Here’s What We Found Hiding in 1 Employer’s Healthcare Spending

Category: Healthcare

Medications that Don’t Work and Costs that Vary by 865%: Here’s What We Found Hiding in 1 Employer’s Healthcare Spending

Healthcare

Approximately $2 billion of employer-sponsored health care spending is wasted each year due to unnecessary or preventable costs across the continuum of care. This is approximately 20% of total health spending by employers each year, according to the American Health Policy Institute.

Wasteful spending was a concern that one of our clients was facing when we met them. Their healthcare spending was increasing year over year in line with the healthcare industry trend, which is right now at +6% to +7% each year. Like most employers, a small group of people was driving a large percentage of their healthcare costs. And as, year over year, they were footing the gargantuan bill for their employees and their families, they were left with some very reasonable questions:

“Is the money we’re investing in our wellness program even making people healthier?”

“Is our diabetes-management program working?”

And, quite literally, the million dollar question…

“Where can we save on our healthcare costs?”

This employer partnered with us because of our team’s background in healthcare and wellness data science, as well as our team’s experience in advising large employers on their health spending strategy. We studied several years of their health and pharmacy data and we looked at this data by member status (employees, spouses, children) and by work location (corporate office, field offices, distribution center). We brought in absence data and we looked at the smoking status for each member. Here’s just a sampling of some of the highlights we found:

Diabetes is a major cost driver, but it could be costing less. Diabetes test strips, which were one of their top prescription drug cost-drivers, have costs that can vary by brand by up to 865%. The high cost variability of these test strips is not necessarily correlated to their quality. On one hand, an employer wants to make it as easy as possible for employees to access the diabetic supplies they need. However, without controls around this spending this could be a source of health spending leakage.

Members are not being driven to cost-effective medications. Pharmacy costs for diabetes medications were increasing year over year while medication adherence was decreasing. That right…the employer was paying more for less pills. What we found was that fewer people were taking their medications (adherence was decreasing). And of those who were taking their medications, they were being driven to the “preferred” brand of medication, but this brand was not the cheapest. This explains why they were paying more for less pills. This is also an indication that their medication formulary needs to be revised.

An expensive method to quit smoking was not working. A costly and well-marketed medication to quit smoking was costing in excess of $63,000. When we examined adherence, very few of the people who took this medication completed treatment. This was most likely due to the medication’s unpleasant side effects. In fact, of the 58 people who started taking this medication, only 3 completed the recommended round of treatment. Clinical evidence indicates that 1 in 2 patients completing this therapy will quit smoking. This means that it cost this company $63,000 for 1 or 2 people to quit smoking. This expensive (and, in this case, ineffective) medication was on the plan’s preferred drug list. If the pharmacy plan had step therapy in place, people looking to quit smoking would be directed to use effective, yet less expensive medications before moving to more costly medications.

The Emergency Room is a cost-driver, while very few members use Urgent Care. Emergency Room visits were on average 4 times more costly than visits to Urgent Care. Not only were very few members ever using Urgent Care, there was a long list of Emergency Room “frequent flyers.” This informs the employer’s communication strategy on educating their members on the purpose of Urgent Care, as well as how to identify when a trip to the Emergency Room is necessary.

Employers typically have two goals when it comes to paying for employee healthcare: they want to support employees in improving their health, and they want to control costs. As a former veteran of the corporate wellness industry, I will be the first person to tell you that lots of companies will promise to make employees healthy and to save them money. Very few will actually deliver. This is because employers want a partner who will help them to control health costs, not just to deliver a program.

Unfortunately, there’s no magic wand an employer can wave to suddenly reverse everyone’s chronic diseases. But there are many opportunities to ensure condition management programs have a positive return on investment. Furthermore, there are subtle clues hiding in their data that can show them areas where they are losing money where they shouldn’t. These are the many little holes where there’s healthcare spending leakage. It is our job is to find these holes for employers.

The good news for any employer looking to reduce wasteful health spending is that the insights we find are actionable. In this example, what we uncovered in this data is now being used by this employer to save money. Their Chief Human Resource Officer deserves enormous credit for not accepting the status quo with respect to their healthcare spending. He is among a growing number of HR professionals who understand that with the high cost of healthcare comes a responsibility to closely manage these costs. Their data drives a holistic strategy around health and wellbeing services that aligns with the strategy of the business. We are proud to partner with them to provide the actionable transparency they need to achieve their wellbeing goals.

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BetaXAnalytics is a healthcare data consulting firm that helps employers to cut their healthcare spending through proven strategies to contain costs. For more insights on using data to drive healthcare, pharmacy and wellbeing decisions, follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

This week in healthcare news: Warren Buffett, CVS, Aetna all talking about lowering costs—who will succeed?

Healthcare

February 27, 2018

Warren Buffett Shares Details on His Healthcare Alliance with Amazon, JPMorgan

Warren Buffett made some bold statements for CNBC on Monday about Berkshire Hathaway’s healthcare alliance with Amazon and JPMorgan. Buffett stated, “I love the idea of tackling what I regard as the major problem in our economy,” referring to the rapidly increasing proportion Americans are paying for healthcare. He goes on to explain that in 1960, healthcare was 5% of GDP ($170 per person), and this spending has increased to today’s rate of 18% of GDP (over $10,000 per person). For Warren Buffett, this is a competitive disadvantage for America.

Speaking of the goals of Berkshire Hathaway’s alliance with Amazon and JPMorgan he states, “It would be very easy to shave off 3-4% just by negotiating power…we’re looking to do something much bigger than that.” They want to halt healthcare’s increasing share of U.S. GDP by finding a way to deliver better care at a better cost. See the 5-minute interview here: Buffett Shares Details on Healthcare Alliance.

Today: CVS and Aetna’s General Counsels Testify Before Legislators in Washington

Amid investigations in numerous states of accusations of unfair claim denials and unfriendly patient practices, Aetna has been getting its fair share of negative press in the last month. But on Tuesday, February 27th Aetna’s and CVS’s General Counsels testify before the House Subcommittee on Regulatory Reform, Commercial and Antitrust Law on CVS’s planned acquisition of Aetna. Their goal? To convince this subcommittee that CVS and Aetna’s combined forces are good for healthcare and good for consumers. The testimonies, both published in full on sec.gov, paint a very different picture of Aetna’s future goals from what’s currently volleying through the media.

The testimony of Thomas Sabatino, General Counsel for Aetna, starts by acknowledging that the U.S. healthcare system is inherently flawed; he explains it was formed in the mid-20th century for the benefit of hospitals, employers and insurance companies—not for the benefit of patients. He acknowledges that the U.S. is “the most expensive system in the world,” yet half of American adults are affected by chronic conditions such as diabetes, heart disease and obesity. With rapidly rising health costs and deteriorating health, he says that Aetna recognizes that “the status quo is not sustainable.” But he goes on to assert that now, with increasing consumer demands and rapidly advancing technology, that it’s time to focus on the consumer. And, as his testimony states, CVS and Aetna are the players that will make that possible. With compelling figures that 70% of Americans live within 3 miles of a CVS store and 5 million people visit a CVS every single day, he lays out how the retail chain is poised to be a community-based health center to address the areas of the World Health Organization’s holistic view of health (“a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.”) He states, “the key to our strategy is more regular, individualized, and effective engagement with health care consumers not just when they are sick, but as they take steps to maintain and improve health.”

Same Goal, Two Very Different Strategies

Buffett’s healthcare alliance and CVS’s Aetna acquisition are two completely different strategies to tackle rising healthcare costs, but at the helm of these initiatives is a goal to accomplish the same thing—to provide better care for Americans at a lower cost. It’s an exciting time for healthcare with big changes on the horizon. Stay tuned to see if these initiatives live up to their hype.

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Will Amazon’s Joint Healthcare Venture Make You Smile?

Healthcare

Amazon has revolutionized so many aspects of our lives, and now the big question is: will they revolutionize healthcare? It seemed that way, given their joint announcement on January 30th with Berkshire Hathaway and JPMorgan Chase, claiming they were teaming up to form a healthcare company “free from profit-making incentives and constraints.” While the intended goal of this joint venture is “to improve U.S. employee satisfaction while reducing overall costs,” Jamie Dimon of JPMorgan Chase explained, “the three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans.” This announcement sent shockwaves throughout the market, as the stocks for major insurers and healthcare companies went tumbling. Market analysts began waging their predictions for what this new company would look like—Alexa for employee benefits? Diagnostic wearable technology? What could it be? To calm the fears of JPMorgan Chase’s clients, company representatives tempered the message, explaining that the initiative can be compared to a group purchasing organization, similar to the type of setup used by hospitals to buy supplies, so the 3 companies could leverage better deals for their employees.

Whoa, Nellie.

OK, maybe we all got a bit ahead of ourselves. Warren Buffet, who compared healthcare’s skyrocketing costs to a “hungry tapeworm on the American economy” admitted that the three companies do “not come to this problem with answers.” But he resolutely stated that they did not need to accept the current state of healthcare. Bezos went on to say, “hard as it might be, reducing health care’s burden on the economy while improving outcomes for employees and their families would be worth the effort.” These companies bring serious purchasing power to the healthcare market. Amazon, JPMorgan Chase and Berkshire Hathaway have a combined market cap of $1.62 trillion, and between all 3 companies there are 1.2 million employees. Last year, JPMorgan alone spent $1.25 billion on medical benefits for U.S. employees where the medical plan covers almost 300,000 individuals, including employees and their family members.

What will this healthcare partnership most likely look like?

While we can’t predict what this solution will evolve to become over time, JPMorgan disclosed a crucial piece of information following the joint venture announcement—that the initiative can be compared to “a group purchasing organization.” The overall goal of this initiative is to cut healthcare costs and to improve employee satisfaction. So the best way we can understand what this joint venture solution will be is to look at the current state of employee healthcare for these companies.

Hint: follow the money

Taking a look at who is currently making a profit off of Amazon, Berkshire Hathaway and JPMorgan Chase’s healthcare benefits is a good place to start when we’re asking ourselves what this new healthcare company will look like.

A 30-second tutorial on health benefits

But it’s useful to take a 30 second detour for anyone unfamiliar with the employer healthcare market to understand where these companies are coming from. These days, most employers with over 1000 employees “self insure” for their healthcare benefits, meaning they pay health claims for their associates from dollar 1. For large employers, and especially for jumbo employers like Amazon, Berkshire Hathaway and JPMorgan Chase, it’s simply more cost-effective to pay for healthcare in this manner—they tend to not need to pay a health insurance company to take on the financial risk of their “sickest,” most costly employees (i.e. people who require major surgeries or treatments, those requiring costly medications or people with multiple chronic illnesses). Employers like this work with a health insurance company (for instance, United Healthcare, Aetna, Blue Cross) to perform the administrative functions of paying providers and settling claims. Either the health insurance company or a pharmacy benefits manager will handle the pharmacy side of employee healthcare claims.

Large employers such as these 3 have been using innovative tactics to control healthcare costs for years. From using healthcare analytics to strategically manage wasteful spending to moving health clinics right into their corporate offices, large employers historically have been ahead of the game with managing healthcare spending. After all, it’s Warren Buffet who notoriously said, “GM is a health and benefits company with an auto company attached,” understanding that because healthcare is the first or second highest company expense, that portion of the “business” must be managed as strategically as any other business unit.

Mission critical: cut out middleman expenses, cut down on employee healthcare headaches

So back to the original question of, “who profits from Amazon, Berkshire Hathaway and JPMorgan Chase’s healthcare spending today?” Here’s a sampling of the likely suspects who are middlemen in the game of keeping employees and their families healthy:

1. Health insurer(s) (United Healthcare, Aetna), who charge an administrative fee for settling medical claims

2. Clinical condition managers (often employed by the health insurer) who help to coordinate care for employees with chronic conditions such as diabetes, cancer, heart conditions

3. Wellness service companies such as Limeaid or Virgin Pulse, who administer health-related educational programming, employee health screenings, incentive programs to encourage employees to see their doctor and stay active, and fitness challenges to encourage physical activity and healthy behaviors

4. Pharmacy benefits managers or related pharmacy services, such as Optum or CVS who take care of prescription drug claims and/or cost-management

5. Surgery cost-bundling vendors who negotiate with medical providers to receive more competitive, bundled rates on surgeries and costly medical tests

6. Health analytics companies such as Truven (IBM) or Medeanalytics who use health and pharmacy data from employee claims to help with strategic healthcare cost management

7. Telemedicine vendors who offer the availability of doctors via phone for employees who need to discuss a health concern, but cannot see a doctor in person (or cannot wait for an appointment)

8. Health advocates and/or health “concierges” that exist to help employees navigate the confusion of the health system to better understand services that are in and out of network, applicable deductibles and coinsurance

9. Employee benefits platforms that exist so employees can understand the specifics of all benefits available to them, including health insurance and pharmacy coverage, and employee health savings accounts

10. Benefits brokers and consultants who help to manage the coordination of all these programs and manage vendors

Understanding that the goal is to cut healthcare costs, it’s this list of middlemen who may be on the chopping block, as their services may potentially be replaced by this new joint venture. For instance, these 3 companies may form a non-profit company to handle settling their employee claims (the job which is currently done by the health plan). Similar to many health insurance companies, managing chronic diseases, managing pharmacy claims and offering wellness services could be companion services offered by this new venture. Only these services would likely be more effective than those of a health insurer because the company would solely exist to keep employees healthy—not to make money. And since profit would not be the motive, access to healthcare analytics to enable strategic management of costs and population health would be more transparent, truly existing for the benefit of Amazon, JPMorgan and Berkshire Hathaway. There are many possible solutions that will save healthcare dollars and improve employee satisfaction for these companies, but the most likely solution will incorporate some form of replacement of some or all of these 10 services that employers use to provide healthcare coverage, to manage healthcare costs, or to help employees to better leverage healthcare services for better health outcomes.

So will this forward-thinking trifecta hack healthcare to solve the problem of rising costs for the rest of the country? Perhaps in time. But the more significant message in this bold move is that Amazon, JPMorgan and Berkshire Hathaway have taken a public stand to say that they will not accept the status quo of healthcare in the United States. The rising costs, the confusion of employees trying to navigate the tangled healthcare maze, and the overall lack of improvement in employee health can no longer be accepted as the norm. And as this solution begins to take shape, it will send ripples through the healthcare space, as a new expectation takes priority in employer-sponsored healthcare—getting healthcare shouldn’t be so difficult, it shouldn’t cost so much, and healthcare should be making people healthier. Now there’s a change that will bring a smile.

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Correcting Patient Coding Can Save Millions

Healthcare

Physician burnout is a real thing. Between seeing increasing numbers of patients, documenting visits and reviewing health records, more tasks are expected of healthcare providers. According to a Mayo Clinic Study, 54% of physicians reported at least one symptom of burnout. While there are many new technologies to assist with patient care, using new technology does not always integrate well with the face-to-face, personal nature of providing medical care. Some physicians perceive that technology slows them down, as they do not have the time between patients to update codes and clinical details in documentation. But the reality is that taking the time to ensure proper coding reduces the likelihood of redundant tests, the risk of medical errors, and can significantly impact value-based contract reimbursements. So in this sense, taking the time to input patient information, document and code patient conditions is critical.

From a financial standpoint, healthcare CFOs understand the benefits of accurate patient coding. The transition to value-based payment models in healthcare is accelerating under the Medicare Access and CHIP Reauthorization Act (MACRA). The intent is to provide financial motivation for providers to manage more patients under risk-bearing or coordinated care contracts. The two methods of managing physician reimbursement under MACRA—Advanced Alternative Payment Models (APMs) and Merit-Base Incentive Payment Systems (MIPS)—both hinge on correct clinical documentation to assign accurate risk adjustment scores.

From a provider’s standpoint, risk adjustment scores such as the Hierarchical Condition Category (HCC), impact physician documentation practices and requirements. This means that all chronic conditions need to be reported on an annual basis for all patients, regardless of the care setting, in order to correctly estimate the risk score for a provider’s patients. Annually, this information is reported to the Centers for Medicare and Medicaid Services (CMS) in a Risk Adjustment Processing System (RAPS) submission. In many cases, this submission is compiled from claims data; but while claims data carries a great deal of information on a patient’s medical history, it often understates the true “risk” of the patient population. In financial terms, this means that providers who understate their patient risk receive a lower reimbursement from CMS. In other words, because of inadequate patient coding, healthcare providers are leaving money on the table.

How can healthcare organizations solve the problem of underreported patient risk? We ventured to take on this problem, and sought to find a solution that any provider group, large or small, could use. Understanding that not everyone has the budget for an expensive platform or a team of auditors to check through exhaustive patient records, we wanted to see what technology could do to ensure patient risk is accurately coded and reported—without putting an additional burden on physicians.

We used machine learning and natural language processing of unstructured data, encompassing millions of files, including doctor’s notes and faxes. Within the many silos of data were notes captured of patient conditions that were not always reflected in the claims coding in the patient’s electronic health record. This technology enabled us to shortcut the work that would normally be undertaken by an entire auditing team manually reviewing patient files. To give an idea of the efficacy of a process like this, in this case we were able to discover $1.3 million in under-represented risk reimbursements for the provider group.

For healthcare CFOs who are looking to make sure patient coding is accurately reflecting population risk adjustment for CMS reporting, there 2 options to ensure your organization isn’t leaving money on the table. 1) Invest in hiring additional people to educate, input, and audit correct patient EHR codes or 2) invest in a technological solution to ensure you’re not losing out on reimbursements due to under-reported patient risk. Healthcare organizations who form a strategy to ensure correct risk adjustment reporting can see millions in additional deserved reimbursements on their bottom line.

For a free demo, contact us.

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BetaXAnalytics is a healthcare data consulting firm that helps payers and providers to maximize their CMS reimbursements and helps employers to reduce their healthcare spending through proven strategies to contain costs. For more insights on using data to drive healthcare, pharmacy and wellbeing decisions, follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

The Future of Healthcare is 3 Letters: CVS

Healthcare

There’s a lot of speculation surrounding CVS’s acquisition of Aetna that’s planned for 2018. But one thing we know for certain is that CVS’s direction in 2018 will make an enormous imprint on healthcare in the U.S. as we know it.

On December 3, CVS announced their agreement to acquire Aetna, the nation’s 3rd largest insurer, for $69 billion. To put the sheer magnitude of a deal like this into perspective, this deal would be the largest in the history of health insurance. CVS is currently a Fortune #7 company with an annual revenue of $177.5B; Aetna is #43 on Fortune’s list with an annual revenue of $63B. According to the current Fortune 500 list, the merged CVS/Aetna would have the 2nd highest annual revenue, second only to Wal-Mart.

CVS has expressed the desire for this acquisition to improve the integration of patient care, and to provide higher quality care at a lower cost in “communities, homes and through the use of digital tools to support health.” CVS’s President and CEO Larry Merlo communicated the desire to put customers “at the center of health care delivery.” The intent would be to leverage CVS’s 9,700+ retail stores and 1,100 Minute Clinics to create community-based centers that include resources for wellness, medical, pharmacy, vision, hearing and nutrition services. And the touted benefit of acquiring Aetna is that integrated care and higher negotiation power for pharmaceutical drugs is the key to lowering costs.

This deal is projected to happen in the second half of 2018. At this point, it is unknown whether the acquisition will face anti-trust opposition. While vertical mergers (which combine 2 companies which are not direct competitors) don’t traditionally get blamed for stifling competition, CVS’s announcement comes on the heels of the Justice Department’s block of AT&T’s takeover of Time Warner, citing the acquisition would create “too powerful of a content company.” And with 2 recent horizontal healthcare deals halted for antitrust reasons (Aetna/Humana and Anthem/Cigna), CVS’s Aetna deal will need to pass through close scrutiny in Washington before the deal can be finalized. In October, Trump declared “My administration will…continue to focus on promoting competition in healthcare markets and limiting excessive consolidation throughout the healthcare system,” though many are betting that this vertical deal will go through with only the requirement of some concessions by CVS and Aetna.

My predictions for 2018? One of two things will happen.

Possibility #1: Regulators block CVS’s Aetna acquisition

What is to stop regulators from saying that this deal will create “too powerful of a healthcare company?” This is indeed a possibility, albeit one that many think is unlikely. But in this past year alone, the Federal Trade Commission blocked Walgreens’ purchase of Rite Aid, while the Justice Department intervened to prevent Aetna’s acquisition of Humana and the Anthem/Cigna merger. While these were considered horizontal deals among competitors, the Department of Justice blocked these deals because they would drastically restrict competition and “fundamentally reshape the insurance industry.” Would the CVS/Aetna deal not also do the same thing?

If this acquisition is blocked, it signifies that the regulatory tide could be changing with respect to how the largest players in healthcare can evolve. With the “big five” insurers, which cover approximately 90% of all commercially insured Americans, unable to strategically gain market share through jumbo mergers and acquisitions, this opens up the door for new entrants into healthcare markets who are better at solving healthcare’s problems than their behemoth counterparts. It also encourages existing competitors to home-grow solutions in their organizations rather than joining forces with outside partners.

Possibility #2: CVS’s Aetna acquisition moves forward in 2018

Let’s imagine for a moment that the deal does go through as planned. The likely next step is that Express Scripts, the only other big PBM not owned by an insurer, will merge with a health insurer like Humana, and may even buy its own pharmacy chain such as Walgreens. This trend would change the landscape of healthcare, giving all power to a few vertically integrated giants, and putting any smaller PBMs or insurance companies at a crippling competitive disadvantage.

CVS’s vision of transforming local retail stores into community health centers where people can not only pick up prescriptions, but also see a doctor, talk to a nutritionist, or receive vision care is a compelling evolution of the way we seek self-care. This type of model could be the answer to the convenience that people want with telemedicine, but it breaks down the barriers to full adoption by putting a community-based centralization on the care they receive.

As we consider these two possibilities, we should ask some big questions.

Do companies become more innovative when they get bigger?
Do competitive moves like this help to fight the steadily rising costs of healthcare?
Will this improve the quality of care that people receive?

Whether 2018 is the year that the CVS/Aetna merger moves forward, or whether 2018 is the year that the CVS/Aetna deal is blocked, either way will lead to a crossroad that will signify the next evolution for healthcare in America. The promise of the benefits to consumers—transforming retail stores into hubs for health services and potentially better prices as a trickle-down benefit from improved negotiation power with pharmaceutical manufacturers—paint a compelling picture for what the future of American healthcare could be. Only time will tell whether consumers will be the winner in this deal, whether the winner will be the shareholders, or whether we’ll never get to find out.

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My Top 4 Strategies for Saving Money on Employer-Sponsored Healthcare

Healthcare

If you think understanding your own hospital bill is confusing, imagine scrutinizing a bill for 18,000 people. How do companies know if they’re being overcharged for healthcare services? Are people receiving care that is actually effective? Why are some medications so expensive? As an employer, this is a challenge that is all too real.

Many companies want to offer competitive benefits, but the high cost of healthcare adds real challenge (and cost) to this goal. A great quote from Warren Buffett wraps up the employer/healthcare conundrum in a bow:

GM is a health and benefits company with an auto company attached. -Warren Buffett

Employers who purchase health insurance for their employees are paying one of the most significant portions of our total healthcare “bill” in the U.S.–$640 billion each year to be specific. It’s unfortunate that we’re in this place where the cost of healthcare has risen so sharply over the past decade that healthcare is now often an employer’s 2nd highest expense, right after salaries. Shouldn’t this expense be managed with the same rigor as any other part of the business?

If you ask a traditional broker how to manage costs as an employer, you may get a list of strategies that don’t actually lower healthcare spending, but rather they change who is paying for it. Here’s an example of exactly what this looks like. The 2016 Society of Human Resource Management (SHRM) Survey lists the following strategies as the most successful in controlling health care costs:

Offering consumer-directed health plans (e.g., health reimbursement arrangements, health savings accounts).
Creating an organizational culture that promotes health and wellness.
Offering a variety of preferred provider organization (PPO) plans, including those with high and low deductibles and co-pays.
Increasing the employee share contributed to the total costs of health care.
Offering a health maintenance organization (HMO) health plan.
Providing incentives or rewards related to health and wellness.
Placing limits on, or increasing cost-sharing for, spousal health care coverage.
Increasing the employee share contributed to the cost of brand name prescription drugs.

These strategies absolutely hit the goal of impacting an employer’s bottom line, but this often happens at the expense of employees. Noticeably missing from these strategies is anything that actually gets at the high source cost of services. But what actually lowers the underlying cost of healthcare?

Instead of these mainstream strategies that are often-cited as the go-to methods for employers to “save money,” here are just some of my top high-value strategies that target cost-management without putting more financial burden on employees:

1. Explore new funding models. Small and mid-sized employers who are fully-insured pay higher operational costs since the health plan takes on more financial risk. However, hybrid plans of self-insurance provide lower costs while incorporating stop-loss coverage and predictable, level payments so that even small and mid-sized employers can self-insure.

2. Change the healthcare delivery model. Employers can use high performance networks that have a limited number of quality health care providers. Because the cost of health services can vary wildly between different providers and these price differences are not correlated to the quality of care, using narrow networks helps to ensure that you’re getting the best value for your money—great care at a fair price. The benefit of exploring new healthcare delivery models is lower premiums, lower out of pocket costs, or a combination of both.

3. Use new payment models. This solution includes care that is pay-for-performance such as partnering with Accountable Care Organizations (ACOs). The advantage of moving away from traditional payment models is that we move away from “fee-for-service” (the doctor gets paid more for seeing you more often) and towards outcomes-based payments (providers get paid for curing you, regardless of how many times they see you). The National Business Group on Health’s 2018 Health Care Strategy and Plan Design Surveyindicated that 21% of employers plan to promote ACOs in 2018 but that number could double by 2020 as another 26% are considering offering them. Other payment models include using “centers of excellence” for high-cost procedures. This enables the employer to ensure that associates are receiving the best care and the best price under payment agreements that are bundled into one comprehensive cost.

4. Proactively manage pharmacy costs. Partnering with an organization to keep pharmaceutical drug costs in check can hold a great deal of value for an employer’s bottom line. A big part of the management of pharmaceutical costs involves developing a strategy around specialty medications. This includes looking at specialty drug spending trends among members, how drugs are being used, cost differences in where they’re administered (hospital vs. provider), coordinating benefits between the medical and prescription plans, and implementing step therapy to ensure that options for less-expensive similar medications are used before jumping to the most expensive prescription. In addition, reviewing and revising formularies can make a large impact on costs with very minimal impact on members.

Are you cost-saving, or cost-shuffling?

Just how any other business unit in a company manages to their budget, managing health spending and strategy is a necessary part of ensuring that the high cost of health services are kept in check. This can be done by shuffling who is paying for healthcare, or it can be done by going after the source of what’s driving the costs. If I can share one takeaway here, it’s that employers have options with respect to saving health dollars. In the coming years we will see more and more employers moving away from simple “cost-shuffling” of health dollars and getting strategic about managing healthcare’s underlying high cost.

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BetaXAnalytics partners with employers to use the power of their health data “for good” to improve the cost and quality of their health care. By combining PhD-level expertise with the latest technology, they help employers to become savvy health consumers, to save health dollars and to better target health interventions to keep employees well. For more insights on using data to drive healthcare, pharmacy and wellbeing decisions, follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

The 3 Top Reasons Why Your Hospital Bill Is So Confusing

Healthcare

It’s no secret that we have a pricing issue in healthcare. The U.S. healthcare spending was $2.7 trillion in 2011 and is expected to reach 20% of our GDP by 2020 if this trend continues. We spend twice as much per capita on healthcare in this country, but ironically our health ranks among the worst in the world. For us, the baffling reality is that the high cost of healthcare in no way means that we are healthy.

When we break down our cost and quality issues in healthcare, we find that the experience for patients trying to navigate the maze of the health system is a micro version of the macro problem. It’s confusing, and it seems that there is no relationship of the cost of services and their quality.

Why? Our best intentions say that the average consumer has the tools they need to gain some visibility into pricing of healthcare services, but unfortunately there are some big obstacles that make this difficult.

1. Different patients and payers are charged different prices for the same services. Each hospital assigns a price to each service in what’s known as a “chargemaster.” This is a price list for each and every service and supply a hospital provides. The chargemaster is something very few people inside a hospital have visibility into, let alone consumers trying to navigate the health system. Oh, and we should mention that a chargemaster could contain 20,000 services and supplies; scrutinizing price lists is not easy for the average person. Insurance companies negotiate these list rates down for their “in network” providers. These discounts are usually related to how much buying power the payer has, and these discounts tend to be buried in private contracts. A patient who is uninsured or out of-network does not get the same negotiated discount on services that would be afforded to a patient who is insured and in-network.

2. Prices for the same services can vary significantly from hospital to hospital. Can you imagine 2 car dealerships each selling a Honda Civic, where the price at one dealership is $18k, yet the price at the other dealership is $100k? Well, this is exactly what happens in healthcare right now. The difference between prices for the same procedure can be upwards of 800%, and the price difference is in no way indicative of a higher-quality surgery.

Consider a few real examples:

A report from the Healthcare Financial Management Association cited estimates between $33,000 and $101,000 for a knee replacement when several dozen health providers were asked by the US Government Accountability Office.
The cost for a hip replacement can range between $11,100 and $125,798.
An appendectomy can cost anywhere between $1,529 and $186,990.
A basic health care plan available under the ACA can cover most, but not all health expenses. According to George Washington University, an appendectomy could mean anywhere between $458 and $56,000 in patient out-of-pocket expenses.
Cotton swabs or x-rays can be marked up by 400%.

3. Even if you shop around, you can still get a surprise bill. If you have ever needed a trip to the emergency room, chances are your wallet may have taken a hit. A recent Yale study found that 1 in 4 emergency room visits to an in-network hospital resulted in surprise billing to consumers for an out-of-network doctor. That’s right—your in-network hospital can bill you for out-of-network doctors. This could be for an anesthesiologist, a radiologist, or a doctor who is helping your in-network surgeon, and involvement of any of these individuals on your care team could end up on a surprise bill once you’re discharged.

The reality: price transparency in healthcare is murky at best. The Catalyst for Payment Reform gave 43 states an “F” grade for price transparency in health care. You can see how your state stacks up here: Report Card on State Transparency Laws

Health Transparency Grade, By State

Source: 2016 Report Card on State Transparency Laws

How employers can help. Employers are footing $640 billion of the healthcare bill in the U.S.; we have the buying power and leverage to have a say as to where this money is going. The lack of healthcare price transparency makes it a challenge for people trying to navigate the healthcare system, but employers can use strategies to control the source of healthcare costs. Stay tuned for my part II of this post, where we will explore these strategies in detail.

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Dear Employer: High Deductible Health Plans are Making People Sick

Healthcare

We get it. Healthcare is expensive and costs are going up every year. Medication costs are skyrocketing. For some chronic conditions, a year of treatment with a specialty drug can exceed $100,000. American companies are shouldering the burden of a healthcare system where ½ of what we spend in healthcare is considered “wasteful”. Healthcare is now the 2nd highest business expense for most companies, second only to salaries. And because most employers pay their health claims at dollar 1, regardless of what their business does, by default all companies end up in the business of healthcare. And something’s gotta give.

Why do employers bear the burden of the inefficiency of the US healthcare system? In US healthcare we spend twice as much per capita with health outcomes that rank among the worst in the world. So the growing trend for employers to deal with crippling health care costs is to find others to share in this cost. Why not hold employees more accountable? After all, employees’ personal health choices and behavior make up37% of health costs. Employers tell their employees “let’s solve this together. We will support you.”

So very well-meaning companies offer “high deductible health plans” to employees. On the surface, it’s a win-win. The thought behind these plans is that if employees have to contribute more to their healthcare costs, they will take more responsibility for their health. In theory, employees will take better care of themselves so they can stay healthy. They will avoid unnecessary medical procedures, since they are responsible for paying for costs under their deductible. Employees will start to compare costs of medications and procedures to make sure they’re keeping their health expenses as low as possible. And so with average out-of-pocket costs for individual employees at $5,248, the rationale is that overall health costs for both the employer and the employee will go down since employees start to understand the value of their health, and they become smarter consumers of health care.

From an employer perspective, this sounds like a brilliant plan to control costs. But does this idea to transform Americans into savvy health consumers actually happen once a company starts expecting employees to pay a higher share of health costs?

Nope.

As we track the results, there is evidence that raising employees’ out-of-pocket costs for healthcare does NOT increase consumerism, and it also has led to people not taking necessary medications and delaying care for chronic conditions, which leads to more serious health events (and costs) later on down the road.

Employers save money in the short term…but at what cost?

Researchers from UC Berkeley and Harvard studied the results of a large employer’s choice to offer a high deductible plan over 2 years. But instead of finding evidence to support the theory that high-deductible plans make people take more charge of their health spending, they found some surprising trends. Yes, employees spent 12% less on their healthcare, so in the short term these plans achieved their goal of lowering health costs. But these “savings” were from avoiding care of EVERY type. There was no evidence to show that employees were comparing costs or cutting unnecessary services once they had a high healthcare deductible. They went to the same doctors. And they cut low-value health services at the same rate as they were cutting important medical services, causing the employer to question whether members were making the right choices for their long term health.

Yes, But What if Preventative Services are Free?

The common response from employers with high deductible plans is to make sure necessary and preventative health services come at little to no cost to employees. But a recent study from California found that despite these efforts, 1 in 5 people still avoided preventative care citing cost as the reason. In fact, most high deductible health plan members surveyed did not know that their preventative screenings and important care was available with little or no out-of-pocket payments. Additional studies show that high deductible health plans have the most adverse impact on those with chronic conditions, people with mental health disorders, and low-income individuals and families. The danger of high deductible health plans is that their members with the highest health risks have shown that they avoid necessary care and medications. And this trend is one of many symptoms of the crippling cost of healthcare in America.

Employers: we know you did not ask for the job of footing $640 billion of our healthcare bill in the U.S. It’s ridiculous, we know. But we just want to make sure you know high deductible health plans are a band-aid—not a solution.

Signed, Hardworking Americans

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If you’re an employer who feels there’s got to be a better way to control health care costs, you’re on to something. And we can help. BetaXAnalytics partners with employers to use the power of their health data “for good” to improve the cost and quality of their health care. By combining PhD-level expertise with the latest technology, they help employers to become savvy health consumers, to save health dollars and to better target health interventions to keep employees well. For more insights on using data to drive healthcare, pharmacy and wellbeing decisions, follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

3 Simple Ways Companies Can Help Employees with Addiction

Healthcare

After struggling with pain from severe headaches, Michele Zumwalt turned to her doctor for help. He prescribed Demerol to manage the pain. But soon after starting treatment, Michele noticed that she started having headaches if she didn’t have her medication. Over the next several years, what started as a way to manage chronic pain turned into a full-blown addiction to painkillers. Working in corporate sales, she recounted putting on entire presentations for clients and not even remembering the conversations. What’s more, her clients did not notice her silent addiction. Now sober for over 12 years, Zumwalt wrote of her experience in a book about recovery called Ruby Shoes.

In 2017, what was once a problem that we thought was far from our homes and offices now affects our families, our coworkers, and our communities. Drug overdose is now the leading cause of accidental death in the U.S., according to the Department of Health and Human Services. Since 2000, the rate of opioid overdose deaths has more than doubled, and the cost of inpatient hospitalizations due to overdose since 2002 has nearly quadrupled. And because of the highly addictive nature of painkillers, addiction has no prejudice. It affects people from all walks of life, including seniors, celebrities, teens, professionals and newborns.

For too long we’ve viewed drug addiction through the lens of criminal justice. The most important thing to do is reduce demand. And the only way to do that is to provide treatment — to see it as a public health problem and not a criminal problem. ~President Barak Obama

Opioid addiction is an epidemic, and it touches the workplace with the same pervasive force. Opioid abuse costs employers approximately $12 billion annually. A 2016 study by Castlight Health found that 1 out of every 3 opioid prescriptions covered by employers is abused, and that painkiller abusers cost employers nearly twice as much ($19,450) in medical expenses on average annually as non-abusers. Opioid addiction is rarely discussed in the workplace, and those affected tend to be very good at hiding their addiction. But there are some simple steps employers can take to help to address opioid use and dependence.

1. Understand the impact. A look into a company’s own health data is the first step is to understanding how exactly opioid use affects their employees. Understanding how painkillers are being prescribed, when opiates result in emergency treatment and the correlation to absences and workers compensation claims helps to quantify the problem for a company. Understanding the scope of the issue informs decisions on a written drug-use policy, whether to do employee drug testing and what drugs to test, how to educate managers and staff, and how to best provide resources to help employees and their families.

2. Reduce the stigma. Most employees struggling with addiction are doing so in silence. They may fear losing their job, and they have developed all sorts of strategies to hide their addiction from their families, friends and coworkers. Employers can play a key role in leading the charge to normalize the discussion on addiction. By helping to lead the conversation in educating employees on opioid use and addiction resources, they can help break the barriers that prevent people from recognizing dependence and seeking treatment.

3. Open access to treatment resources. When companies understand how addiction is impacting their employees and their health costs, they are well-positioned to match member needs with necessary addiction treatment services. These companies may find that they need tools beyond the traditional employee assistance program, as they open access to treatment centers and other helpful tools to support people through recovery. By making data-driven decisions, opening access to resources, and communicating with members, companies can further remove the barriers that keep people from seeking treatment.

It’s hard to believe that Nancy Reagan’s “Just Say No” campaign for the War on Drugs began over 30 years ago. In those days, we imagined the detectable dangers of drugs as dealers hanging out on playgrounds, giving out drugs to kids like candy. But today in 2017, the danger that faces 20.5 million Americans is much harder to recognize. Many addictions aren’t born on street corners; they start in the doctor’s office. And whether an employer chooses to address the epidemic or not, they have co-workers who wake up and face a life driven by addiction every day. Isn’t it time we as employers become part of the solution?

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About BetaXAnalytics:

BetaXAnalytics uses “data for good” to improve the cost and quality of health care for employers. By combining PhD-level expertise with the latest technology, they help employers to become savvy health consumers, saving health dollars and better targeting health interventions to keep employees well.

Follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

5 Big Reasons Why Employers Should Use Health Analytics

Healthcare

We’re living in funny times when there’s a public outcry for open accessibility to affordable healthcare, yet employers still cover over half of the non-elderly population in the U.S. So this leaves employers, very few of which have in-depth knowledge of how to keep people healthy, footing a large bill and assuming the health risk of their employees. In fact, 82% of employers with over 500 employees are considered “self-insured,” meaning that they pay dollar for dollar the claims of their employees, spouses and dependents. For most of these employers, healthcare is their second largest expense, second only to the cost of salaries.

So this leaves any smart employer with a very reasonable expectation—they want to keep their employees healthy. After all, they’re footing the bill for healthcare, so they have a vested interest in the health of their employees and their families. But how do you keep people healthy? Do you go home with them to make sure they don’t devour a package of oreos at night? Or call them to remind people to take their blood pressure medication? Or wake them up early to make sure they hit the gym before work?

Of course these interventions sound crazy. People’s health habits are a product of personal choices that are decades in the making…and changing these habits is a tall task. So employers are left to manage all sorts of 3rd parties to handle just this—to administer health services, to provide resources for health coaching, to inspire employees to be physically active, and to provide behavioral health and addiction services. But the basic problem remains…employers are paying for these services, so how can they know they are getting what they pay for? This is one of the reasons why health analytics is so important.

Here are the top reasons why employers need to use health analytics:

1. To understand employee health needs. Most employers, in addition to offering health insurance to employees, offer services to address employee health needs. The goal of offering health services is to improve employee health and to lower health costs over time. These services could be health coaching, health seminars, fitness challenges and weight loss programs. And with the average employer spending $693 per employee on wellness incentives, they want to make sure they understand which services are needed most by their employees. This helps them to spend wisely. This moves them from the spaghetti method of health and wellness spending—throwing everything to the wall to see what “sticks,”—to a data-driven health and wellness strategy that can be justified and measured for their senior management.

2. To give high-risk employees the health resources they need. What if you were able to know someone was going to have a heart attack before it happened? The amount of data available today can be used for a very good purpose—to help to match people with proactive care before they end up in a hospital. Let’s say you use an outside service to provide health condition management for your members. The only way condition management can be valuable is if it is reaching the right employees. Leveraging health analytics of your members can ensure that the right members are receiving proactive condition management outreach at the right time—before they end up in the hospital.

3. To find wasteful spending. Most employers today are under increased internal scrutiny to ensure that they are doing their due diligence in managing their vendors, and the total health and wellness cost for employers is significant. Annual premiums for employer-sponsored family health coverage is $18,142, according to a 2016 employer survey from Kaiser Family Foundation. One very common source of “waste” is the misuse of the emergency room (ER). Understanding the magnitude of emergency room misuse and patterns in the reasons for costly ER visits helps to inform how to best communicate existing benefits to employees, communicate alternatives to the emergency room as well as to evaluate changes to ER co-pays to encourage employees to seek alternative forms of urgent care when it makes sense.

4. To manage prescription costs. A 2016 study by Castlight Health found that 1 out of every 3 opioid prescriptions covered by employers is abused, and that painkiller abusers cost employers nearly twice as much ($19,450) in medical expenses on average annually as non-abusers. Rising opioid usage and skyrocketing specialty medication costs are at the top of mind for employers, but most employers get very little transparency into this information. Examining prescription drug data helps employers to better understand medication usage, adherence and addiction among their members. This provides valuable information that is crucial to help them to save money in the future, make needed changes to their pharmacy plans and to provide appropriate behavioral health and addiction resources to members.

5. To manage health service vendors. It is becoming more common for wellness service contracts to include performance guarantees, meaning your company could be getting money back, sometimes up to 30% in returned fees, if employee health is not improving as promised. If your company has performance guarantees in your vendor contracts, you’ll want the ability to have your own source of truth on whether those guarantees are being met. Have you ever had a question that was met with 3 different answers from 3 different vendors? This is comparable to doing your taxes – you may take your tax documents to 3 different accountants and come up with 3 different numbers on your return. Every vendor is looking at data through a different lens, and some lenses are more accurate than others. It’s ironic that employers foot the bill for employee health, yet they rarely have the ability to have their own data arsenal to inform their decisions and audit vendors. Analytics helps employers to become more savvy “consumers” of health services.

Bottom line – when you are spending a lot of money on something, you deserve to know if that money is being well-spent and you deserve to know how you might be able to save money in the future. This is the value to employers of making data-driven decisions on their healthcare spending. And if you have the opportunity to receive this data from an impartial 3rd party whose contract is not “on the line” based on the data they provide (i.e. not the health plan, not the wellness service provider), an employer is in a prime position to best manage these services.

About BetaXAnalytics:

Follow BetaXAnalytics on Twitter @betaxanalytics, Facebook @bxanalytics and LinkedIn at BetaXAnalytics.

shannon shallcross

data for good

Category: Healthcare